C O N T E N T S PAGE 1 Executive Summary 3 2 Scope of this Strategy 3 3 Procurement Principles 4 4 Route To Market 6 5 Procurement Governance 8 6 Procurement Plan 2018/19 8 GLOSSARY EU European Union ICT Group The Community Housing Group OJEU HE Homes England PCR Information & Communications Technology Official Journal of the European Union The Public Contracts Regulations 2015 (the EU Procurement Rules) HR Human Resources PQQ Pre-Qualification Questionnaire 1 of 8
1 EXECUTIVE SUMMARY 1.1 This strategy complements and informs the Group s 2018 2021 Business Plan to provide affordable homes and services and places where people want to live and work and other strategic documents and sets out the context, objectives and approach to procurement for the Group. 1.2 This strategy sets out the key principles that the Group have agreed to adopt in ensuring that all externally provided supplies and services are fully compliant, offer best value for money and add social value where appropriate. 1.3 The strategy is under-pinned by a detailed procurement policy (including operating procedures) which are part of the Group s Standing Orders and Financial Regulations. 1.4 Effective contract management is critical to achieving procurement outcomes and departmental managers will ensure that their contracts are properly managed and report on results. 1.5 Performance against our procurement targets will be measured and be subject to internal audit reviews. 1.6 The Group has agreed a 3 year efficiency plan (2018 2021) and procurement activity is a key strategy to deliver financial savings as demonstrated below: Procurement Savings 1 st Year (2018/19) Additional Saving In Year 2 (2019/20) Cumulative 2 nd Year (2019/20) Additional Saving In Year 3 (2020/21) Cumulative 3 rd Year (2020/21) 3yr saving against Business Plan (2018-2021) 65k 35k 100k 35k 135k 270k 2 SCOPE OF THIS STRATEGY 2.1 This strategy covers all Group functions and services, including but not limited to: Asset Management and Repairs Development Housing Management Corporate Services (HR, Finance, ICT, Legal, PR & Marketing) Consultancy Energy Supplies Independent Living Services 2.2 This procurement strategy should be read in conjunction with the following documents: The Group s Value for Money Strategy HE s Value for Money Standard Asset Management & Development Strategy Procurement Policy (part of the Group s Standing Orders and Financial Regulations) 2 of 8
2.3 Overview of Procurement Activity 2.3.1 The Groups Procurement Policy, defines the entire process for seeking and obtaining works and services. Example templates for each stage of procurement are provided and the means of evaluating the results are explained, together with clear delegated authorities. 2.4 Implementation 2.4.1 To underpin procurement activity, the Group has appointed a Procurement Manager whose remit will be to deliver and oversee the strategy objectives. 2.4.2 The post holder will specifically provide procurement support, advice and guidance to all staff who have a procurement need to carry out their respective duties. More specifically the central procurement function provides the following services: Specific advice on EU Regulations and associated areas, including latest case law Benchmarking and identification of best practice Leading and facilitating high profile tender exercises Spend analysis and the identification of potential savings opportunities and areas of collaboration, including combining spend categories where appropriate Participation in key commercial exercises, such as supplier selection and reviews Providing information to the Company Secretary to maintain a contracts register Engagement with partners and potential partners with the objective of streamlining the procurement process Agreeing with managers the Route to Market Providing up to date support via the intranet, toolkits, procurement guidance and advice Carry out an annual review of spend in the Group to drive the following years Procurement Plan Supporting managers in developing specifications and tender documents 2.4.3 Procurement is not simply about lowest price; instead it is a strategic tool to ensure that we receive value for money whilst putting the needs of the Group s residents first. Effective procurement is about managing the whole life cycle of the goods and services we procure, and also ensuring that specifications are right and fit for purpose with clear outcomes and purposes. 2.4.4 Budget holders are responsible for delivering value for money from the contracts they are responsible for. 3 PROCUREMENT PRINCIPLES 3.1 The Group s mission statement is 'to provide affordable homes and services and places where people want to live and work. 3.2 With significant procurement activity anticipated within the lifetime of this Strategy, the Group recognise the potential to progress our Business Plan priorities through an effective Procurement Strategy. This supports our Group priority and values to be: 3 of 8
Agile Accountable Customer Orientated and Efficient 3.3 Value for Money 3.3.1 The Group will build on our culture of prudent resource management, capturing the commitment to value and efficiency within a lean framework to support the Group s drive to eliminate waste, at all levels. 3.3.2 Our procurement strategy endorses a range of different procurement methods, with the aim of testing VFM in the context of robust governance and with the aim of delivering enhanced customer services and optimum performance. 3.4 Social Value 3.4.1 The Group recognises that each procurement process is an opportunity to support the social, environmental and wellbeing of communities that are impacted by our operations. The Group will always consider what outcomes can be achieved, but ensure they are proportionate to ensure the procurement activity balances achieving value for money and community investment. 3.5 Customer Involvement 3.5.1 Customer s views will influence procurement approaches where appropriate. This particularly applies where services are being procured which directly impacts on customers. The Group will develop processes to capture customer s views and that customers are directly involved in relevant procurement decisions. 3.6 Compliance with Health and Safety Legislation 3.6.1 Health & Safety (H&S) legislation imposes duties on employers and employees. The Group expects all tenderers to demonstrate compliance with statutory duties, and to conduct business in such a way that the H&S of employees and visitors is not put at risk. 3.6.2 The tenderers commitment to H&S, previous H&S record and measures for the management of the project H&S will be a key element of the procurement quality assessment. 3.7 Fairly and Ethically Traded Goods and Services 3.7.1 The Group will aim to develop measures that ensure, as far as possible in the procurement of contracts, that fair and ethical trading principles are applied in a relevant and proportionate manner. 3.8 Prompt Payment 3.8.1 All public bodies have a legal duty to pay commercial debt within 30 days and European Directive 2011/7/EU allows interest and recovery costs to be claimed if invoices are not paid on time the Group adopts this principle. The Group is alert to the potential impact of late payment and is committed to ensuring the prompt and efficient processing and payment of authorised invoices. Through procurement documentation the Group will stipulate compliance with these conditions for all subcontracting arrangements. 4 of 8
3.9 Procurement Risks 3.9.1 A structure approach to the identification, quantification and subsequent management of Procurement risk must be adopted so that risk is retained by, or transferred to, the party who can manage the risk most effectively and so that appropriate risk mitigation measures can be adopted. This will include: Project Outcome and Risk Document for each Procurement Project Financial checks on suppliers/contractors Market testing Transfer of specific risks by Contract wording Contract wording to review and exit the contract where performance does not meet requirements Imposition of penalties for poor supplier performance An Approved Contractors and Suppliers List An annual review of all Contractors and Suppliers An annual review of all spend across Group to check OJEU compliance and to drive the annual procurement plan. 3.9.2 The Procurement Manager will work with the relevant Manager to identify and manage procurement risks during the procurement process. 4 ROUTE TO MARKET 4.1 In simple terms the strategy explained in detail in this document amounts to achievement of the following key milestones: Outcome following a detailed appraisal of our procurement needs, the Group will clearly define the desired outcomes, risks and controls and the steps we need to take to reach these objectives. Policy and EU Compliance our Procurement policy sets out the regulations that all procurement should comply with which includes: The Groups Standing Orders, Financial Regulations and Procurement arrangements. The Public Contracts Regulations 2015 ( the EU Procurement Rules). Any relevant binding guidance from the Group s Regulator. The Modern Slavery Act 2015. Achievement of Social Value where appropriate Minimise Procurement Activities and Costs Achieve and Prove Value for Money Achieve Cost Effective Services 5 of 8
4.2 So, our procurement route to success can be illustrated as follows: Define Outcome Policy and EU Compliance Implement Social Value Minimise Activities & Costs Prove Value for Money Achieve Cost Effective Services 4.3 The Group is a major purchaser of specialist construction labour in the local economy, but a small purchaser of wider goods and services when viewed on a regional or national basis. The Group s route to market therefore reflects a balanced approach which: Utilises the benefits of collaborative purchasing and procurement to drive value for money in market terms Procures locally for labour, where the local economy and social return on investment will be greatest 4.4 Why This Strategy? 4.4.1 Procurement itself is an expensive and time-consuming activity. Client/purchase and supplier both need to invest significantly in the procurement process and the return on this investment only comes over time, during the period of the supply agreement or contract. 4.5 Consortia/Frameworks 4.5.1 To minimise the cost of procurement to ensure OJEU compliance and maximise value for money the Group will use consortia/frameworks to procure goods and services wherever possible. 4.6 Direct Procurement 4.6.1 Where consortia do not meet the Group s needs, particularly where the focus is local, then we will procure direct. This will involve structured local tendering (in accordance with our Procurement Policy) for suites of contracts where we will manage price and social outcome locally. 6 of 8
5 PROCUREMENT GOVERNANCE 5.1 Overall responsibility for this strategy rests with the Executive Director / Managing Director (OCS). 5.2 Each Executive Director is responsible for the procurement arrangements within their Directorate. 5.3 Managers are responsible for the day to day management of procurement arrangements and subsequent contract management which fall within their area of activity and for ensuring officers within their teams comply with the Group Procurement Policy. 5.4 Officers are responsible for procurement within their budget areas in accordance with the delegated levels set out in the Group s Standing Orders and Procurement Policy. 5.5 The Company Secretary is responsible for maintaining a register of all contracts and agreements entered into by and on behalf of the Group. 5.6 Underwriting these responsibilities are the detailed policies, procedures and processes to be adopted by all procuring officers as defined in the Group s Procurement Policy. 6 PROCUREMENT PLAN 2018/19 6.1 Procurement Efficiency Saving ( 135k pa by 2020/21). Approved by Group Board 7 th February 2018. Projected 2017/18 Spend Proposed 2018/19 Budget Year 1 (2018/19) Savings Legal Services 80k 70k 10k Office Supplies 35k 25k 10k Financial/Treasury Services 20k 15k 5k Energy Supplies 475k 450k 25k Development Consultants 75k 60k 15k 685k 620k 65k 6.2 Additional Procurement Projects for 2018/19 Proposed Budget/Target New Integrated Business Solution Software 850k Oakleaf New Build Sub Contractors 2,412k 7 of 8
6.3 In future years, the contracts register will be reviewed in advance of each year for all contracts due to expire in the following year and the Group Board will agree an annual procurement programme, in advance of the year commencing, adopting the requirements of this strategy and following the approved Procurement Policy to deliver the plan. The Community Housing Group April 2018 8 of 8